ServiceMagic 2014 Annual Report Download - page 78

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IAC/INTERACTIVECORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
At December 31, 2014 , the Company has federal and state net operating losses ("NOLs") of $61.5 million and $82.6 million , respectively. If
not utilized, the federal NOLs will expire at various times between 2023 and 2034, and the state NOLs will expire at various times between 2015
and 2034. Utilization of federal NOLs will be subject to limitations under Section 382 of the Internal Revenue Code of 1986, as amended. In
addition, utilization of certain state NOLs may be subject to limitations under state laws similar to Section 382 of the Internal Revenue Code
of 1986. At December 31, 2014 , the Company has foreign NOLs of $107.5 million available to offset future income. Of these foreign NOLs, $98.1
million can be carried forward indefinitely and $9.3 million will expire at various times between 2015 and 2034. During 2014 , the Company
recognized tax benefits related to NOLs of $0.8 million . At December 31, 2014 , the Company has $5.1 million of state capital losses. If not
utilized, the state capital losses will expire between 2015 and 2017. Utilization of capital losses will be limited to the Company's ability to generate
future capital gains.
At December 31, 2014 , the Company has tax credit carryforwards of $19.0 million . Of this amount, $5.2 million
relates to federal credits for
foreign taxes, $8.2 million relates to state tax credits for research activities, and $5.6 million relates to various state and local tax credits. Of these
credit carryforwards, $10.0 million can be carried forward indefinitely and $9.0 million will expire within ten years.
During 2014 , the Company's valuation allowance increased by $36.0 million primarily due to increases in unrealized capital losses, net
operating losses, and tax credits. At December 31, 2014 , the Company has a valuation allowance of $98.3 million related to the portion of tax loss
carryforwards and other items for which it is more likely than not that the tax benefit will not be realized.
A reconciliation of the income tax provision to the amounts computed by applying the statutory federal income tax rate to earnings from
continuing operations before income taxes is shown as follows:
No income taxes have been provided on indefinitely reinvested earnings of certain foreign subsidiaries aggregating $605.7 million at
December 31, 2014 . The amount of the unrecognized deferred income tax liability with respect to such earnings is $141.5 million .
62
Years Ended December 31,
2014
2013
2012
(In thousands)
Income tax provision at the federal statutory rate of 35%
$
94,475
$
145,705
$
101,172
Change in tax reserves, net
(86,151
)
1,791
17,703
Foreign income taxed at a different statutory tax rate
(8,943
)
(17,428
)
(16,240
)
State income taxes, net of effect of federal tax benefit
7,240
7,469
7,650
Non-deductible goodwill associated with the sale of Urbanspoon
6,982
—
—
Non-deductible impairments for certain cost method investments
23,310
1,756
226
Other, net
(1,541
)
(4,791
)
8,704
Income tax provision
$
35,372
$
134,502
$
119,215